Morning Note: A Round-up of Global Financial Market News.
Market News
Brent crude has slipped back to $107 a barrel after Trump waived Russia energy sanctions, raising the prospect of increased Russian fuel exports. However, the price has retained most of last week’s gains, as escalating hostilities in the Middle East and Eastern Europe kept supply risks elevated. Clashes between Saudi Arabia and Iran-backed Houthi rebels showed little sign of abating, with a Saudi helicopter crashing near the border with Yemen and the Houthis targeting Yanbu, a key oil export hub. Three tankers were also damaged in the Strait of Hormuz over the weekend as Iran’s IRGC navy maintained that the waterway remained closed and vessels could pass only with its authorisation.
Dovish remarks from Federal Reserve Chair Kevin Warsh prompted traders to scale back expectations of an October rate hike. Speaking at the IMF’s annual meetings in Bangkok on Friday, Warsh avoided signalling the outcome of this month’s FOMC meeting but noted that hotter-than-expected inflation had not changed his assessment of the US economy. The Fed has since entered its blackout period ahead of the 27-28 October policy meeting, with markets pricing in an approximately 84% probability of rates remaining unchanged. The yield on the 10-year US Treasury continued to nudge lower to 5.07%, while gold is firm at $4,185 an ounce.
US equities ended a poor week on a soft note – S&P 500 (-1.1%); Nasdaq (-2.1%) – after another burst of selling in technology shares drove the Nasdaq to its worst week since the April 2025 tariff turmoil as investors questioned the outlook for the AI trade. CoreWeave, the cloud-computing services provider whose bonds recently hit levels that typically signal distress, sank 12%. The mood has improved this morning – the Nasdaq futures are up 1.3% – while in Asia this morning, equity markets were mostly firm: Nikkei 225 (-0.6%); Hang Seng (+0.5%); Shanghai Composite (+0.4%); Kospi (+1.8%). The FTSE 100 is currently 0.4% lower at 10,835, while Sterling trades at $1.3320 and €1.1875.
M&G, Ninety One, Mediolanum International Funds and Raymond James Wealth Management have reportedly bought gilts ahead of Chancellor Healey's first budget, positioning for a fiscal discipline outcome. The 10-year currently yields 5.38%.
The focus this week will be on corporate earnings, with releases from Tesla, Meta, Netflix, American Express, GE Aerospace, EssilorLuxottica, EQT, InterContinental Hotels, Atlas Copco, Nestle, P&G, and Newmont.
European assets face headwinds from French civil unrest — weekend riots over living costs have deepened fiscal concerns and weighed on the euro, which slipped below 1.12 before recovering. The French-German yield spread is currently 143 basis points.
According to Rightmove, UK asking prices rose 1.0% MoM in October, with the YoY rate improving to -0.1% from -0.8%, suggesting a modest stabilisation in the housing market.
